Florida market

mitchdesjJune 29, 2010

We've been renting a condo for last season and just renewed our lease for another 12 months, with a 90 day escape clause, should we find something to buy.

We looked at a building on Singer Island that was not even half sold in 2 years, and recently it was taken over from the builder by a Miami group, now our agent tells us the units will increase since financial uncertainty has been removed. I don't see how this should affect the market price.

what do you think?

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pamelah

Hey Mitch. South Palm Beacher/lifetime Floridian/retired lawyer here. Financial uncertainty does affect prices, but this is a uniformly horrible condo market. We had a similar condo bust in the 80's with the S&L crisis. Prices stayed flat for nearly 10 years.

Singer Island is a great location, and you should be able to get some decent comps to determine current market value. Look at the months of unsold inventory for the market area, and the price trend of the comps. In my opinion those are the real indicators of price you should expect to pay.

Is it where you want to live? Buy it if it fits your financial plan.

Do you plan on selling it within 10 years? Don't count on making money, but you probably won't lose any money.

Are you intent on catching the bottom? That's hard to do. When the buyers come back in the fall/winter they will look around to see if prices have dropped. If they haven't dropped, expect to see prices creep back up on properties in premium locations.

Some big money is starting to move on the new ghost town condos. I assume they will attempt to rent the units until the market firms up. Would it bother you if the building filled up with renters? Check the condo docs for rental rules and don't buy if the provisions aren't to your liking.

Good luck to you.

    Bookmark   June 29, 2010 at 10:50AM
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mitchdesj

Hi Pam, thanks for your response; we rent in south palm beach, love the area .
I have noticed more and more buildings with renters, it's become a fact of life.

Toll Brothers have a waterfront bldg we like on Singer Island, they are very independent on their pricing and won't budge, they owe no money on it. We know we won't make money, we are looking at not losing . We plan to buy for the next 5 to 7 years, then upgrade to our forever location once we retire.

We would like to pay bottom price and we may go in august, before the snow birds arrive again in november. We figure that the summer months will have been quiet and our offers might be well received.

    Bookmark   June 29, 2010 at 9:05PM
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pamelah

Mitch: I think your August plan sounds good. We bought another property last August for the construction of our "forever" home. The market was so quiet. We intended to demo the existing home, so inspections were not an issue. So, a cash offer with a 10 day closing got everyone's attention.

If you aren't a cash buyer be ready with preapproved financing. That will get the seller's attention, and the realtors will apply more pressure. Everyone wants to get paid, right?

Re the renters issue, what I am trying to alert you to is to look as to the maximum number of rental terms per year, per unit, and the minimum rental term. Frequent short term rentals can disturb you as a full time resident, and they can suppress the value of the property. It has been a long time since I was involved in residential mortgages, but at one time the allowed rental frequency also affected the type of mortgage available on the condos. Eg: Too much rental=no Fannie or Freddie. That may not be the case now, but check it anyway because it would be a factor for resale.

Wishing you steady SE ocean breezes!

    Bookmark   June 30, 2010 at 5:58AM
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mitchdesj

We will be cash buyers so that's not an issue, thanks for your comments.

    Bookmark   June 30, 2010 at 6:22AM
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